TBA Purging Rule Change
The LMA would like to advise the market that the purging rules are being amended from 1 June 2016. This amendment relates to:
The amendment is accelerating the period that first party claims (excluding the Casualty Class) with a TBA qualifier are purged.
- first party claims (excluding the Casualty Class) with a TBA qualifier – a table of first party risk codes (below) is provided to support those business classes impacted:
- Accident & Health
- Casualty Treaty
- Overseas Motor
- Property (D&F)
- Property Treaty
The purging timeframe on both open subscription and singleton claims is reduced to 12 months (for notification) with a purge taking place at 15 months, unless XCS are notified otherwise as per the current reporting process.
- all claims with a ‘U’ Uber code will follow the relating purging rules for that business class
- current ‘Specific Exceptions’ for open subscription claims to remain in place (see attached appendix).
The purging rules effective from 1 June 2014 stated the ‘Notification to Lead Managing Agents’ would occur at 21 months with a purge at 24 months. This rule remains for all other classes and Liability claims.
Analysis has been completed on open claims with an associated TBA qualifier code over a 5 year period, this analysis identified that 81% of TBA’s that become a claim (financially), do so within 12 months. This has highlighted that there is a large proportion of work being completed on claims that never become a financial claim.
The first party /TBA purging rule has been implemented to reduce the time spent in the market on TBA claims that are 12 months old (or greater), which will also assist with the reduction of statics and align with static reviews being conducted by managing agents (where possible).
For more information or if you have any queries, please contact Lee Elliston on: email@example.com or 020 7327 8340.